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A measure of inflation that tracks the average price change of a basket of goods and services over time.
Why It Matters
CPI is the most widely watched inflation indicator. When the Bureau of Labor Statistics releases CPI data monthly, markets react immediately. A higher-than-expected CPI often means the Fed may raise interest rates, which tends to push stock prices down. CPI directly affects your purchasing power, Social Security adjustments, and tax bracket thresholds.
Key Points
- CPI measures price changes across categories: food, housing, transportation, medical care, and more
- Core CPI excludes volatile food and energy prices — the Fed watches this number closely
- The Fed targets roughly 2% annual inflation — CPI consistently above that triggers rate hikes
Related Terms
Common Questions
A measure of inflation that tracks the average price change of a basket of goods and services over time. CPI is the most widely watched inflation indicator. When the Bureau of Labor Statistics releases CPI data monthly, markets react immediately.
CPI is the most widely watched inflation indicator. When the Bureau of Labor Statistics releases CPI data monthly, markets react immediately. A higher-than-expected CPI often means the Fed may raise interest rates, which tends to push stock prices down. CPI directly affects your purchasing power, Social Security adjustments, and tax bracket thresholds.
CPI measures price changes across categories: food, housing, transportation, medical care, and more
Core CPI excludes volatile food and energy prices — the Fed watches this number closely
The Fed targets roughly 2% annual inflation — CPI consistently above that triggers rate hikes